Is the Prop 33 discount really a discount?

On Election Day, California voters will decide on Proposition 33 which would change the way insurance companies charge for their auto policies although maybe not the way you think.

People have been stopping 7 On Your Side's Michael Finney on the street and asking him about their discounts for staying with one insurance company. They ask, if Prop 33 passes, how do the consumers move their discounts? The short answer is they can't. Here's the long answer.

Prop 33 ads are running across California. The measure offers to change the way auto insurance rates are figure benefiting, its backers say, those who have received loyalty discounts for steadily paying their auto insurance for years. "They will be able to take the discount they have earned and shop for a better deal with an insurance company of their choice," says one ad. The YesProp33.com website says, "Proposition 33 allows you the freedom to change insurance companies and keep your discount."

Now, you may have a discount, but might not be able to keep it. "The only difference we are making with 33 is that you can take this loyalty period with you. We're not doing anything else," says Chairman of Mercury Insurance George Joseph. The loyalty period will move with you from company to company. The discount might not. Why? Discounts are set by each individual insurance company. You can't make an insurance company give you a loyalty discount it doesn't offer.

Finney: So, you're taking the concept of a discount, not necessarily the discount?

Joseph: That's right.

For instance, look at the loyalty discount from Unigard of 8 percent. The company calls it a "renewal credit." If a policy holder moves to Mercury Insurance, their history of being insured would move under Prop 33, but the discount would be left behind.

Finney: What persistence or loyalty discount does Mercury offer here in California?

Joseph: Almost none now. Almost none.

Mercury's premium could be cheaper and many times will be, but the discount still doesn't move. So, don't think of Prop 33's moveable loyalty or persistence discounts as a coupon you hold that each company must honor. It's not like that.

The Yes On 33 people said Friday today that if the measure passes, they do expect insurance companies to fire up history of coverage discounts and start competing using them.